Canadian Dollar Reaches Highest in 2 Weeks on Economic Prospects

March 6 (Bloomberg) -- Canada’s currency strengthened
beyond C$1.10 per U.S. dollar for the first time in more than
two weeks as building permits climbed more than forecast, adding
to signs the global economy is picking up.

The currency rose for a second day after the Bank of Canada
kept its key interest rate unchanged yesterday and reiterated
its next move depends on the progress of the economy. Global
stocks gained as the European Central Bank held its benchmark
rate unchanged and raised growth forecasts. U.S. jobless-benefit
claims fell to the lowest since November even as a harsh winter
has weighed on other reports.

“Every piece of data we’re getting is confirming weather
has impacted growth but it hasn’t derailed growth, and globally
central banks aren’t really moving away from their stance, and
the Bank of Canada holds a very neutral tone, not a dovish
tone,” Camilla Sutton, head of currency strategy at Bank of
Nova Scotia, said by phone from Toronto. “All of that is very
good for a pro-cyclical currency like the Canadian dollar.”

The loonie, as Canada’s currency is known for the image of
the aquatic bird on the C$1 coin, appreciated 0.4 percent to
C$1.0985 per U.S. dollar at 5 p.m. in Toronto. It touched
C$1.0956, the strongest since Feb. 19, reaching beyond its 50-day moving average for the first time since October, a technical
signal it may gain more. One loonie buys 91.03 U.S. cents.

The Canadian dollar dropped to C$1.1224 in January, the
weakest since 2009, as investors bet on lower interest rates
after the central bank said inflation would stay at almost the
bottom of its 1 percent-to-3 percent target band this year and
flagged the currency’s strength as a headwind to exports.

No Mention

Yesterday’s policy statement made no mention of the
currency and said the latest data on economic growth and
inflation were stronger than expected.